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Choosing the property

Choosing an area

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Aside from considering the area from the point of view of individual tenants, you must not forget to look at the bigger picture and think about some of the broader issues affecting the area as a whole.

Local knowledge
Many people recommend that it is useful to know the area in which you are going to buy. Certainly local knowledge is important, but there are times when it can sway your opinion in the wrong direction, for instance if you have had a bad experience of living in an area that essentially represents a good investment. There is definitely a case for getting the (possibly) more objective view of a lettings agent in the locality. They will help you understand the peculiarities of local market requirements - supply and demand are key to your decision.

You have to remember to be objective about both the area and the property itself. Your own taste is not hugely important. Medium and long term market requirements are what matters most.

Always try to choose an area where there is a good market for rental property. This sounds really obvious, but is not always considered by some landlords. Outside of city centres, choose areas of high demand - near universities, nursing colleges, large employers and so on. These sorts of institutions should guarantee that there will always be a continuing stream of prospective tenants. Bear in mind though, that some areas will appeal only to certain types of people, so you must be prepared to let your property to that social group unless you want an empty house on your hands.

Local employment prospects have a large affect on the demand for properties. Look out for towns that are popular with relocating companies - most staff will usually rent before they buy, so can lead to high demand. Don't forget that corporate lets usually offer a good return and are generally pretty secure.

Some areas may have a surplus of rental property that well exceeds demand, which could mean that you have to accept a lower than expected rental level, or else risk having an empty property that is bringing in no income whatsoever.

Proximity to you
If you are going to manage the property yourself, you should almost certainly choose an area close to where you live. You are more likely to know the tradesmen and other service providers in your own area and you will inevitably need them at some point in the life of the property. It is also much easier to deal with an emergency if you are usually within easy reach of the property.

Avoid exhausted hotspots
When you're thinking about which area to buy in, it can be tempting to go for an area that is being touted as a current hot spot. This is a dangerous tactic. Once an area is being regarded as a hotspot, you will probably have already missed out on the biggest gains in the price value of properties.

Aim for future boiling points
Your best bet is to try and predict the hot spots of the future, though this is not an easy task. Think about the location, transport links, active interests in the local economy, up and coming schools, EU and government redevelopment grants and think ahead to what the place will be like in three to five years time.

Over time, there are fewer and fewer potential hotspots in an area, as the concentration of high value properties rises. The phenomenon of buyers being forced to look further afield for homes that they can afford is known as the ripple effect. Areas that people are looking to move into when they can't quite afford the current hotspot often give you an indication of the next rung down on the ladder.

Also, look for area that will benefit from large investments in infrastructure nearby, such as new transport links, shopping centres, regeneration programmes and so on.

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